On September 23, local time, Federal Reserve Chairman Powell expressed his position on policy trends and the economic situation, pointing out that the increasing downside risks in the job market were the key reason for the Federal Reserve to cut interest rates last week.
Powell said the move was a step in the policy position’s shift to “neutral” and stressed that there was no forward-looking policy direction. He acknowledged that the current inflation level is still slightly higher than the target, with the core PCE inflation rate expected to be 2.3% in August, where the rise in commodity prices mainly reflects the impact of tariffs rather than widespread inflation pressure.
Powell also noted that consumer spending has shown signs of slowing, corporate confidence is affected by uncertainty, and the labor market dynamics have weakened. he judged that tariffs may cause inflation to rise in the next few quarters, but the inflation caused by tariffs may be “relatively short-lived” and the Federal Reserve will prevent the one-time price rise from evolving into a sustainable issue.